Keep hands off gasoline tax
Thursday, December 29th, 2005
By Chris Fitzsimon
It’s tempting to think that freezing North Carolina’s tax on gasoline would provide significant relief for consumers without hurting the state. Unfortunately, that’s not the case.
Instead, freezing or cutting energy taxes is likely to backfire, increasing the backlog of road projects and requiring a tax increase later.
The gas tax is set to jump 2.8 cents per gallon on New Years Day, the biggest single increase in almost 20 years.
Several mountain legislators asked Gov. Mike Easley to call a special General Assembly session to consider freezing taxes on gas and cutting taxes on home heating fuels. Mainly Democrats, they joined Republicans who called for months for a tax freeze on motor fuels. Easley has wisely resisted opening the door to such a move.
The legislators want to freeze the gasoline tax at 27.1 cents for six months. The tax is based on the average wholesale cost of fuel and is recalculated every six months. Starting Sunday, it is set to increase to 29.9 cents per gallon, reflecting the price spike to more than $3 per gallon after the gulf hurricanes.
In a letter to Easley, lawmakers also suggested a tax exemption for people who use natural gas to heat their homes and cutting the tax for home heating oil by 15 percent.
These taxes are a tempting target, given that North Carolina has the highest average gas prices in the Southeast. But the combination of tax freezes and cuts would take more than $140 million out of the state’s coffers for road-building projects. (more…)
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